Texas Insurance Fraud Laws

Overview of Texas Insurance Fraud Laws

Intentionally defrauding, deceiving or misleading an insurer is a violation of Texas insurance fraud law. Specifically, it is a crime to submit false or misleading information to an insurer regarding a claim or regarding an application for an insurance policy. The defendant has also committed insurance fraud if the defendant, with the intent to defraud the insurer, solicits, offers, pays or receives a benefit in connection with a claim for payment. Essentially, any deceptive or intentionally misleading action or statement made to an insurance company in hopes of gaining an insurance benefit from them is a criminal act.

Example: In order to collect money on an insurance policy on his restaurant, Bob set fire to the kitchen, hoping it looks like an accident. If Bob makes a claim for the fire to his insurance company and states on the claim that the fire was an accident, Bob has committed insurance fraud.

Defenses to Insurance Fraud Charges

Lack of intent to deceive or defraud

The claim or information is not fraudulent or false

Mistake of fact (i.e. Bob truly thought the fire in his kitchen was an accident, even though later it was found that an angry employee purposely set fire to the kitchen.)

A portion of the claim resulted from a valid loss, injury, expense or service covered by the policy (NOTE: This is only a partial defense. The defendant may still be liable for the invalid portion of the claim.)

Penalties and Sentences

The penalties for a conviction on charges of insurance fraud vary depending on the amount or value of the claim. For example, a claim of less than $50 is a "Class C" misdemeanor, which only carries a $500 fine as a penalty. The severity of the penalty imposed increases with the increased value of the fraudulent claim. For example, the most severe penalty for insurance fraud is in the case that the value of the fraudulent claim is $200,000 or more. This will be a first degree felony, which carries a sentence of five to ninety-nine years in a state prison and/or a fine of up to $10,000.

For the falsification of information on an application for insurance, the defendant will be charged with a state jail felony. This imposes a penalty of 180 days to two years in a state prison and/or a fine of no more than $10,000.